Correlation Between Selan Exploration and IdeaForge Technology

Can any of the company-specific risk be diversified away by investing in both Selan Exploration and IdeaForge Technology at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Selan Exploration and IdeaForge Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Selan Exploration Technology and ideaForge Technology Limited, you can compare the effects of market volatilities on Selan Exploration and IdeaForge Technology and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Selan Exploration with a short position of IdeaForge Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Selan Exploration and IdeaForge Technology.

Diversification Opportunities for Selan Exploration and IdeaForge Technology

0.95

Correlation Coefficient

Selan Exploration  IdeaForge Technology

Almost no diversification

The 3 months correlation between Selan and IdeaForge is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Selan Exploration Technology and ideaForge Technology Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ideaForge Technology and Selan Exploration is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Selan Exploration Technology are associated (or correlated) with IdeaForge Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ideaForge Technology has no effect on the direction of Selan Exploration i.e., Selan Exploration and IdeaForge Technology go up and down completely randomly.

Pair Corralation between Selan Exploration and IdeaForge Technology

Assuming the 90 days trading horizon Selan Exploration Technology is expected to under-perform the IdeaForge Technology. In addition to that, Selan Exploration is 1.37 times more volatile than ideaForge Technology Limited. It trades about -0.22 of its total potential returns per unit of risk. ideaForge Technology Limited is currently generating about -0.27 per unit of volatility. If you would invest  58,290  in ideaForge Technology Limited on December 1, 2024 and sell it today you would lose (22,125) from holding ideaForge Technology Limited or give up 37.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Selan Exploration Technology  vs.  ideaForge Technology Limited

Selan Exploration

Risk-Adjusted Performance

Very Weak

Over the last 90 days Selan Exploration Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

ideaForge Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days ideaForge Technology Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Selan Exploration and IdeaForge Technology

The main advantage of trading using opposite Selan Exploration and IdeaForge Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Selan Exploration position performs unexpectedly, IdeaForge Technology can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in IdeaForge Technology will offset losses from the drop in IdeaForge Technology's long position.

The idea behind Selan Exploration Technology and ideaForge Technology Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.